Democrats and Republicans are haggling over it in Washington, D.C., and beyond.

Money experts say it may have a devastating effect on the nation’s economy.

Yet, many Americans don’t understand what it is.

The fiscal cliff.

The phrase fixes a blank stare on the faces of many in Cleveland County and beyond.

But economists say the so-called “cliff” will affect people in every tax bracket and corner of the country.

So what is it? And what do Cleveland County’s elected leaders and The Star’s readers suggest as solutions to the problem?

The ‘fiscal cliff’

What is it?

* A package of tax increases and spending and program cuts set to take effect Jan. 1, unless Congress approves a budget deal to prevent the hikes and cuts. Economists say the tax increases would be the steepest in the country in 60 years when measured as a percentage of the economy. Economists expect such tax hikes to reduce consumer spending and program hikes to result in a barrage of job losses, thus crippling the American economy.

Why is it happening?

Economic experts say there are many contributing factors. Among them:

* The U.S. government has run annual budget deficits in excess of $1 trillion in each of the last four fiscal years. A recent report showed the government started the 2013 budget year with a $120 billion deficit in October, suggesting a fifth $1 trillion annual deficit is likely.

* More than 50 percent of the tax increases would come from the expiration of tax cuts approved in 2001 and 2003 and from additional tax cuts in a 2009 economic stimulus law. About 20 percent of those tax increases would come from the expiration of a Social Security tax cut enacted in 2010. The change would cost someone making $50,000 about $1,000 a year, or nearly $20 a week, and a household with two high-paid workers up to $4,500, or nearly $87 a week.

* Another 20 percent of the tax increase would come from the end of about 80 tax breaks, mostly for businesses. One is a tax credit for research and development. Another lets companies deduct from their income half the cost of large equipment or machinery.

* The rest of the tax increase would come mainly from the alternative minimum tax, designed to prevent rich people from exploiting loopholes and deductions to avoid any income tax. The AMT wasn’t indexed for inflation, so it’s increasingly threatened middle-income taxpayers.

* Another part of the cliff is an expected package of spending cuts in areas of national defense, highway funding, aid to state and local governments and health research, education grants, FBI and other law enforcement, environmental protection and more, according to the White House.

Who will it affect?

* Everyone at every socioeconomic level, economists say. Program cuts would affect jobs in myriad industries, thus leading consumers to spend less. Anticipating reduced sales and profits, businesses would likely cut jobs or delay hiring, all hitting the economy in a negative way.

* Middle income families would have to pay an average of about $2,000 more in income taxes next year, according to the nonpartisan Tax Policy Center.

* The nonpartisan Congressional Budget Office estimates the total cost to Americans would be $671 billion in 2013 alone.

What are national leaders working on to fix the problem?

Congressional and cabinet leaders, and President Obama, are discussing the possibilities of changes in taxes, federal spending to help the unemployed and which federal programs should be priorities if some are cut to save money toward the rising national debt. No deal had been reached as of Friday.

Source: Associated Press

Elected leaders weigh in:

What should the government do about the ‘fiscal cliff?’

“Personally, I think we should start by cutting foreign aid money to countries that are not loyal to us. Many of these countries are not faithful allies and they simply use the U.S. taxpayers for money.”

"First and foremost, Democrats and Republicans need to come together in a bipartisan manner. It’s time for Congress to set aside its partisan differences and work toward a balanced solution to avert the fiscal cliff and sequestration. If we don’t act, taxes will go up on every single family in North Carolina, and that’s unacceptable. I hope my colleagues will join me to enact a bipartisan deficit reduction plan that promotes economic growth and security.”

-- Kay Hagan, US Senator representing North Carolina

“Our country’s massive debt exists not because tax rates are too low, but because government spends too much. We need pro-growth tax reform and real spending cuts to truly avert the fiscal cliff.”

-- Patrick McHenry, US House District 10 representative

“The President and the Congress need to show real leadership by getting federal government spending under control and replacing the current 73,000-page U.S. Tax Code with a simple, fair tax or flat tax system that encourages economic growth and job creation rather than punishes it. Until our elected leaders in Washington are able to make tough budget decisions and curb their deficit spending, the national debt will continue to put our economic future at risk.”

“Congress and the president should come up with a solution sooner, rather than later, with our tax situation…It could hurt our country and impact our economy that could even go to the local level. It’s important to get it solved quickly because of so much uncertainty.”

-Stan Anthony, Shelby mayor

“It will take radical changes to get the situation fixed. We can’t ask them (taxpayers) to pay more than they’re spending now. The No. 1 problem we’ve got is no cooperation at all levels. It’s going to take leadership, someone who can work both sides and leave partisanship out of it.”

-Jason Falls, Cleveland County commissioner

Star readers weigh in:

With fiscal cliff concerns looming, there's a possibility Congress will re-evaluate the charitable giving tax break. What's your take? What do you think should be done about the fiscal cliff?

"Taxing the upper 2 percent higher, or people earning over $250,000 yearly, need to ante up."

-- Doug Collins

“ One solution to our problem would be for every American to pay 10 percent or whatever percent it would be and no tax breaks for the rich or poor. That way it would be fair to everyone.”

-- Kathy Hoyle Weaver

“That is wrong. Leave it the way it is.”

-- Deanna Brown

“A lot of folks give and never receive a tax break. Why should anyone get a tax break? If you give, you give, everyone needs to pay their fair share.”

-- Gerry Beaver

“Our money is being sent to Mexico, Cuba and China. There is no recirculation of our money."